1. Event

Yunyi Electric released its 2016 semi-annual report that the company's income in the first half of 2016 was 256 million yuan, an increase of 11.73 percent over the same period last year. The net profit belonging to shareholders of listed companies was 61.6863 million yuan, an increase of 31.44 percent over the same period last year. The net profit after deducting non-profit was 53.2724 million yuan, an increase of 32.63 percent over the same period last year, and basic earnings per share was 0.30 yuan.

two。 Our analysis and judgment

(1) Automobile production and sales grew steadily in the first half of 2016, and the expansion of supporting customers promoted the steady recovery of the company's main revenue.

Affected by the halving of passenger car purchase tax, the car market improved significantly in the first half of 2016. According to the FIA, 11.0994 million and 11.0423 million passenger cars were produced and sold in the first half of 2016, up 7.32% and 9.23% from the same period last year. In addition, during the reporting period, the company's supporting joint venture brands steadily advanced, and the customer structure continued to upgrade. At present, the company has successfully entered the supply systems such as Changan Ford, Dongfeng Nissan and so on, and has transformed from mainly supplying A-class cars to supporting B-class cars. Benefiting from the growth of the industry and the steady progress of the high-end process of supporting customers, Yunyi's overall revenue in the first half of 2016 increased by 11.73% compared with the same period last year, of which the revenue of the main business vehicle rectifier and regulator reached 231.2869 million yuan, an increase of 11.49% over the same period last year. Accounted for 90.34% of the company's total operating income, contributing to the core growth. It is expected that in the future, with the promotion of the import substitution process, the company will maintain the steady growth of the main industry while strengthening its competitive advantage and further expand its market share at home and abroad.

(2) increase investment in research and development, optimize product structure, and vertically integrate the industrial chain to enhance overall profitability.

On the basis of the steady development of the main business, the company adheres to technological innovation and gradually adjusts the product structure, and the gross profit margin is maintained at a high level in the industry and is gradually increasing. During the reporting period, the total gross profit margin of the company's products was 35.55%. The gross profit margin of the main vehicle rectifiers and regulators was stable at about 30% and increased slightly, while the gross profit margin of other products increased by 19.53% compared with the same period last year. Among them, the new product LIN bus intelligent power controller has high added value and high gross profit margin, and has been supplied in batches. With the improvement of market share, the company's performance will grow rapidly. In addition, the company continues to expand upstream, realizing 100% internal matching of key zero high-power automotive diodes through vertical integration of the industry chain, and on this basis to raise funds to increase 230 million production capacity for export. In the future, if the products are recognized by the core suppliers, the performance flexibility will be released, which will further consolidate the main business and enhance the company's profitability. (3) thickening the main business and strategically laying out the automotive intelligence field and the new energy vehicle field at the same time, the future performance will blossom and open up a new space for growth. 1) it is proposed to acquire Yunbo technology and further thicken the main business by relying on synergy. Yunbo Technology customers cover BOSCH, Remy, Huachuan Denso and other domestic and foreign accessories manufacturers, supporting FAW, SAIC GM Wuling, Changan and other complete vehicle factories, with a leading market share in China. The company intends to acquire 85% stake in Yunbo Science and Technology. If the acquisition is approved and completed, the company will add 3.8 million sets of regulator production capacity, and complement each other with the advantages of product structure and customer resources, and speed up the import substitution process of the company. 2) Intelligent motor and control system have become the new driving force of the main industry. The company's intelligent wiper controller business is progressing smoothly, SAIC has begun to supply in bulk, and the existing products are highly recognized by customers. In the future, it is expected to further open up the market space by improving the supply of integrated products and product penetration, and promote the company's transformation from a second-tier supplier to a first-tier supplier. 3) lay out the electric control of new energy motor and strengthen the determination of transformation.

The company raised 120 million to build an annual production line of 36000 sets of motor and control systems for new energy vehicles and acquired a 51% stake in Shanghai Lixin, which is involved in the field of new energy vehicles. Shanghai Lixin mainly specializes in new energy vehicle motors and electronic control systems, the main customers cover Suzhou Jinlong, Nanjing Jinlong and other commercial vehicle leaders. It is expected that the gradual landing of the subsidy policy in the new energy market in the second half of the year will further improve the company's performance. 4) to set up an industrial M & A fund, the company will continue to carry out related mergers and acquisitions in the smart car industry chain and the new energy vehicle industry chain in the future, with a strong driving force for extension expansion.

3. Investment suggestion

Maintain the recommended rating. The company's main business has maintained steady growth, and the business situation has continued to improve.

While actively opening up customers, the company will accelerate the layout of new business. In the future, it will gradually reach production with the fund-raising projects and gradually usher in the performance inflection point of the new projects. At the same time, the company accelerates the layout in the field of intelligent vehicles and new energy vehicles, and is obviously determined to transform and upgrade. We estimate that the company's parent net profit from 2016 to 2017 will be 125 million and 160 million respectively, corresponding to diluted EPS0.55, 0.70 yuan, PE48X, 38X, maintaining the "recommended" rating.

4. Risk factors.

1) the growth rate of passenger cars is lower than expected due to the impact of the economy; 2) the progress of the company's fund-raising projects is lower than expected; 3) the landing of new projects such as M & An integration is lower than expected.